The Central Bank of Nigeria drained N7.30 trillion from the financial system in May 2026 while injecting only N5.73 trillion back, a net subtraction of N1.57 trillion in a single month. The open market operations hit N5.74 trillion in sales. This is not a technical adjustment. This is a sign that the CBN has abandoned its role as a monetary authority and become a substitute for economic policy.
Let me be direct about what this means. The CBN is using interest rates and liquidity management to do the work that fiscal policy should be doing. When an economy needs stabilisation, the central bank has limited tools. It can raise rates to cool demand or lower them to stimulate growth. It can manage the money supply. But when a government is spending recklessly, borrowing heavily, or failing to generate revenue, no central bank can fix that by draining liquidity. The CBN is trying. It is failing. And Nigerians are paying the price.
The scale of the drain is the point. Removing N7.3 trillion from an economy already starved for credit is not monetary policy. It is self-harm dressed up in technical language. Nigeria's commercial banks are already rationing credit. Small businesses cannot borrow. Manufacturing firms are cutting production. The CBN's approach is to make borrowing even more expensive and scarce. In what world does this solve an inflation problem caused by fiscal mismanagement and currency collapse?
The inflation in Nigeria is not demand-driven. If it were, draining liquidity might work. Nigerian inflation is supply-driven. The naira has lost 60 percent of its value in two years. Import costs have exploded. Food production has been disrupted by insecurity. Petrol refining was broken until recently. These are real problems. You do not solve them by making capital more expensive. You solve them by fixing the naira, securing agricultural zones, and maintaining refinery capacity. The CBN cannot do any of these things. Yet it is pretending that aggressive monetary tightening will somehow fix what fiscal and security policy broke.
A reasonable person might argue that the CBN has no choice. Government spending is out of control. The budget deficit is widening. Inflation will spiral without some restraint. If the CBN does not tighten, the argument goes, the currency will collapse further and things will be worse. This view has a point. But it misses what is actually happening. The currency has collapsed anyway. Inflation is still above 30 percent. And the economy is contracting. The CBN's approach has not worked. At what point do we stop doing the same thing and expecting different results?
Compare this to what the government should be doing. Nigeria's revenue problem is real. The government collects less tax revenue than almost any major economy. The budget is bloated with fuel subsidies that Tinubu promised to remove but has not. Debt service costs are consuming 90 percent of government revenue. But instead of addressing these problems, the government props up the naira artificially, complains about the CBN, and lets the central bank fight inflation with a sledgehammer. The CBN tightens. Banks stop lending. Small businesses fail. Unemployment rises. The economy shrinks. And inflation stays high because supply problems are still not fixed.
What needs to happen is simple to state and difficult to execute. First, the government must make hard choices on spending. It must remove fuel subsidies, not just announce them. It must cut the budget in real terms, not just slow growth. It must increase tax revenue by widening the tax base, not by squeezing people who are already registered. Second, the CBN must stop pretending it can manage an economy in free fall. It should stabilise the naira at a realistic level and hold it there, not drain liquidity to support an artificial peg. Third, the government must address the real sources of inflation: insecurity that disrupts farming, refinery problems, and import-driven price shocks. These require security spending, infrastructure investment, and trade policy. Not interest rates.
None of this is happening. Instead, we get monthly reports of massive liquidity drains and temporary petrol price cuts that create the illusion of progress. The CBN publishes its OMO numbers. The government celebrates lower pump prices. Meanwhile, the real economy is suffocating. Banks are not lending. Manufacturing is offline. Inflation is sticky because nothing has changed. In twelve months, we will see another headline about the CBN draining N7 trillion, and everyone will act surprised.
The tragedy is that this is fixable. Nigeria has oil revenue. It has human capital. It has productive capacity waiting to be deployed. But fixing it requires the government to do hard things: cut spending, raise taxes on the wealthy, secure the North, and accept a naira depreciation as the price of reality. The CBN cannot do these things. It can only make them worse by pretending monetary policy is a substitute for governance. Until that changes, these trillion-naira drains will be the soundtrack to slow decline.
OduViews represents the editorial opinion of OduNews.
